9/4/15

The most innovative and under-rated band of its generation here caught live (the Youtube says 2009 in Germany, that sounds wrong but I don't really care that much and didn't investigate futher) and on tippytop form.

The cover of Midnight Cowboy, though a simple tune, shows how the band members fuse their differences into one sound. The build they get from a simple eight note melody is amazing.

And then one of their standards, track one from the real thing, From Out Of Nowhere and my stars these guys are good at music.

Yesterday I was sent a research note on large cap resource stocks published by BofA/ML in April 2015. Flicking through it last night, this chart really caught my eye:

What with the travails of Glencore now well documented, the shape of the comparative EVs, plus the distinct lack of bad news coming out of Rio Tinto or BHP, got me thinking about which large-caps are going to get out of this mess first and fastest.

UPDATE: Reader 'R' writes in with this:

Further to your post, a quick check on Yahoo finance…BHP pays $2.48/sh in dividends for a 7.3% yieldandRIO pays $2.14/sh for a 6.2% yieldHard to argue where the ‘smart’ money has gone to hide.

I was thinking about making it the chart of the day again, but now that Gary over at Biiwii has taken on the subject and put together a post that's far better than I would have ever done it's a moot point. Go over and see the chart maestro's thoughts for arguably the key metal ratio for September 2015, do that by clicking right here.

9/3/15

Today, Peruvian Precious Metals (PPX.v) filed their regulatories concerning the small private placement the company ran in August, in which C$136,000 was raised by selling 1,600,000 shares at 8.5c apiece.

Notice that quantity, people: one point six million shares sold.

You can see the document here and here below is a section from it, the header table that shows the quantity of cash raised and the numbers of takers in the PP. In this case it happens to be just one person buying all the shares.

So far so normal. It's a single buyer and it's a small PP, but in this rotten market we the observers have kinda got used to seeing this type of "keep the lights on" placement go through, small amounts of cash and big dilutions at low prices.

But a little further down the document, things go from normal to full-on Kafka:

I had a Wile E. Coyote Cliff moment when I got to that part. It was like "Huh? That can't be right" and you scroll up and check the amount of shares place (yup 1.6m) and then you scroll down to check the compensation PPX is paying to the Peru broker guy (yup, almost a million shares) then you scratch your head and go "Huh? That can't be right" and you and scroll up again to check (yup) and scroll back down again (yup) and then say "Huh? That can't be right" and you...okay, you get the picture. But it's all there, filed and signed off by the PPX.v CEO Brian Maher.

PERUVIAN PRECIOUS METALS (PPX.v) JUST PAID 984,615 SHARES TO A BROKER IN ORDER TO PLACE 1,600,000 SHARES AND RAISE $136,000.

Some recent examples have been farcical. Corvus Gold recently dumped its Alaskan assets, selling them for $120,000, but CEO Jeff Pontius framed the deal as “the creation of a Corvus royalty portfolio”, because the company kept royalties over the discarded tenements.

That's because the last round of opinion polls now have the from-out-of-nowhere candidate Jimmy Morales leading voter intention and Manuel Baldizon from the powerful LIDER party, who looked like a shoo-in just a couple of months ago, no longer leading the polls.

This is in fact a window on one of my weak points as an investor. I keep forgetting that there's a near unlimited supply of stupid people out there. Daniel, on the other hand, understands this perfectly.

UPDATE: Daniel writes in (screenshot of mail):

For what it's worth I can state categorically that I have never had a penis in my mouth, let alone sucked on one. It really doesn't do to make such wild assumptions, Daniel.

9/2/15

The real reason it's fine music in my book: The vocals for sure yes, the slap bass forsure, the beautiful lead guitar intromissions yep, but what drives me to crazyloveness about this song is Mike Bordin's drumwork. This is the way John Bonham used to drive Led Zep.

Hodges flatly denies this. “I did not go there to present anything. I was led to believe that I was going to do a meet-and-greet with the local community leaders. My community manager only advised me that I was expected to give a speech to a crowd of some 500 just minutes before the meeting began. So I was not properly prepared, and therefore kept my comments at a high level, described a bit of my background, and emphasized my strong belief in good community relations.”

Hodges points to his experience in mining – which he has been involved in since 1977, including working in many jurisdictions across the globe. “I have plenty of experience working with local constituents, communities, and cultures, and I am also very sensitive to the volatile situation in Peru this past spring, so this whole notion of me walking into a community meeting and insulting people is so far beyond me, it’s ridiculous. And for the record, as opposed to changing the agreement with the community (as has been intimated), I said we would keep it exactly in place, and improve on it,” he says.

The facts are different.

In fact, nobody asked Hodges to go to Ollachea and meet with the community.

In fact, it was Hodges who insisted on several occasions to go to Ollachea and meet with the locals.

In fact, he was strongly advised by several quarters, including his community relations team (the same people he denegrates and tries to lay blame upon in that note), not to make the trip.

In fact, Hodges decided to overrule every single piece of advice he heard on this subject, which came from people both inside and outside the company.

In fact, he knew very well that he'd have to stand up and make a speech. He even got to choose the person who'd translate his speech for him (he went for VP Exploration Don McIver).

These aren't subjective opinions, there are dozens of witnesses who'll testify to all those. He knew he'd have to make a speech because HE INSISTED ON GOING THERE AND GIVING A SPEECH, EVEN AFTER LISTENING TO THE EXPERIENCED PROFESSIONALS AND OTHER ADVISORS WHO TOLD HIM ON REPEATED OCCASIONS NOT TO GO. "Meet and greet" my rear end, he knew he was going to a formal assembly and in Peru that means only one thing. Speeches from the invited and questions from the floor.

The problem may be found in that second paragraph excerpted, because Hodges has such a high opinion of himself and his abilities, despite all evidence to the contrary, that he thinks he can just stroll into any old town and talk with any culture or community, immediately winning them over with a flashing smile or two. Therefore more facts:

He cannot speak Spanish.

He does not understand the culture in Ollachea at all.

He might not have intended to insult those present that evening, but you can take it to the bank that he did just that and in spades. Perhaps it was deliberate or perhaps it was accidental due to his plug dumb ignorance of where he was and who he was talking to (combined with a large dose of hubris) but sure as eggs are eggs, he pissed off the Ollachea locals bigtime.

He specifically told the people present that there would be changes in the way Minera IRL operated and did things. The problem that Señor Hodges has on this score is that a video was shot of that meeting and it's all on the record*. What he thinks he says (when it suits him) is one thing, what he said is quite another.

So to sum up, the man is a liar and is stupid to boot. Seriously, how many lies do you need to catch a guy in before the reality of the situation starts to manifest?

The question arises as to why he still cares about Minera IRL, now that he's been fired. Surely you don't have a continued interest in what's going on, Daryl? Heaven forbid you'd try to influence things from the outside, eh? No boardroom power struggle, y'say? You're so cute.

Back in IKN 321 dated July 5th, The IKN Weekly ran a big long analysis on New Gold (NGD), because I was interested in the stock as a potential play on an eventual improving gold price. I didn't buy any then, but did a couple of weeks ago so I'm now a long and involved shareholder here. But the one thing I didn't do in IKN 321 was set a price target on the stock. Now that gold's shown a bit of mojo. it's long past the time to get really busy on the numbers and work out where the NGD share price can reasonably go under current market circumstances.

Which is a long-winded way of saying that IKN 330 this Sunday isn't going to be about Minera IRL (for a change), it's going to be about NGD, because I want to know just how far this one can travel, let alone you guys.

1) Ritholtz gives us a list of the Fed people and their attitudes towards rates, right here.Nice summary/temperature gauge thingy.

2) I'm not an expert on China, never have been never will be. But the need to know a little more surfaces on occasion and when Michael Pettis entitles a long piece "If we don’t understand both sides of China’s balance sheet, we understand neither" it was impossible to resist. This is longread stuff (and at the end he notes that it's an abridged version of the essay that went out to his subscribers last month) but it's strongly recommended as a window on the subject. It also explains why I've suddenly noticed the phrase "phase shift" being used about China's economy by all the talking heads recently; they've stolen it from this piece. Anyway, go read Pettis on China, you'll be smarter about this key variable once you do.

3) Caesar's Report today published a PDF analysis report on Nevada Copper (NCU.to). It's entitled "If only the copper price would start to cooperate!" and yes, they actually used an exclamation mark. My favourite bits from the report are:

The downturn in copper price has also affected Nevada Copper’s share price, and has reduced the market capitalization to under C$100M. If analysts predicting rising copper prices in the near future are correct, then the current share price of under C$1.20 certainly represents a true buying opportunity.

Nevada Copper Corp. is a sponsor of the website, we also hold a long position. Please always do your own research.

This document is distributed free of charge

Caesar's Report reminds me of that Mencken quote about democracy, "...that the common people know what they want and deserve to get it, good and hard."

At the beginning of the current year, precious metals forecasters were predicting that due to what were seen as extremely positive fundamentals, palladium would outperform its precious metals peers. In the event, palladium has actually been the worst performing of the complex, down around 25% year to date – and it has even fallen over the past few days when gold has been showing slight signs of strength. So far this year it has fallen while even the most bearish of the analysts in the beginning-of-the-year LBMA price prediction competition panel was predicting an average price of well over $700 while at the moment it is languishing at around the $570 mark. While there are four months still to go this year, and a lot can happen in the markets in that kind of time horizon, the chances of reaching even this most pessimistic forecast among the LBMA panellists now look bleak indeed.

9/1/15

This was a long feature in The IKN Weekly (where we do the real work) issue IKN328, from two weekends ago, on the upcoming Presidential and general elections in Guatemala set to happen this weekend September 6th. With the news this evening that President Otto Pérez Molina has lost his immunity from prosecution and has been ordered not to leave the country, the first part's coming closer to reality too.

It was
another tumultuous week in Guatemala
politics. With the presidential elections now drawing near and current
President Otto Pérez Molina trying everything he can to remain in office to
make the transition smooth, three events rocked the fragile peace (with "everything he can" basically
meaning lay low, do nothing, keep out of view).

1)
President Pérez Molina's (ex) Vice President Roxana Baldetti was finally arrested
for her role (I could put "alleged role" if you like, but there seems
little point in playing niceties as she's guilty as hell) in the 'La Linea' tax corruption
scandal (see Weeklies passim).

2) The big
one: The CICIG anti-corruption investigation body published its findings on the
President (9) (10) and accused him of being directly involved in the
multi-million dollar corruption scandal. The killer sound bite was (translated)
"There is no doubt that all
references to "One" and "Two" correspond to the President
of the Republic and to Roxana Baldetti", referring to recorded
telephone conversations that use "one" and "two" as code
words for the people who are to be paid off by companies in return for avoiding
many millions of dollars in import duties and taxes. Even worse, CICIG has
called for formal charges to be made against the President, so sure are they of
the case.

3)
Yesterday Saturday three of his government ministers (Education, Economy,
Presidential Committee for "Competitivity") resigned (11), saying
they felt betrayed by the President and left their posts feeling
"deceived" and "sad". At the same time another
"President Must Resign" rally formed with many thousands of people
packing into Guatemala City's main
square in front of the Presidential Palace (and yes, President Otto Pérez
Molina is in residence).

From
looking reasonably calm just a few weeks ago and weathering the storm of the
first round of the La Linea
scandal, it's now once again nip and tuck as to whether Otto Pérez Molina survives
as President and gets to hand over power. Also, there are now serious calls for
the whole Presidential election to be postponed (12) until CICIG gets to the
bottom of the La Linea
scandal. For one thing the scandal has gone way beyond the President and his
party and affects all the main political parties now (for example, frontrunner
Manuel Baldizón's campaign has been hit hard by accusations of corruption made
against his Vice Presidential ticket running mate, Edgar Barquín). But any
delay to the electoral process would mean above all that there would be nowhere
left to hide for the President and would be very bad news indeed for him and
the general country's stability.

A focus on the Guatemala
Presidential election

With all
that breaking last week, it's now once again a serious and direct influence on
the Presidential election that's just two weeks away, September 6th (assuming
of course the vote takes place, see above). It's worth noting that Guatemala
isn't just choosing its next President on September 6th but is also voting for
a new Vice-President, 158 members of Congress, 20 new members of the Central
American parliament and mayors and town leaders for 338 municipalities. This is
a big vote day.

Therefore
I'd like to turn away from the current government's scandals just a little
(because it's still a big effect here) and take a good look at how the campaign
has developed, because there have been some very significant changes in the
race. We can of course consider the human political factors of this election,
but the real and practical reason for taking an interest on these pages
dedicated to mining companies in Latin America
is pure capitalism: We want to know whether there's the potential for a trade,
with our main target being the heavily Guat-exposed Tahoe Resources (THO.to)
(TAHO) as a potential prime target for any buy-low-sell-high action.

I proposed
back then a call on a possible near-term trade/flip buy on TAHO, depending on
how the election looked. I'm bringing the analysis forward by a week because
there's now a clear picture emerging and it's something of a surprise, too.

The
centerpiece of this article is this chart, put together from the last three
voter intention surveys run by the Guatemalan pollster Borge &
Asociados for the respected news and current affairs magazine
"Contrapoder" (literal translation "against power", gist
translation "counterweight to power"). To give an idea of the survey
technicals, the latest survey taken in August and divulged to the public last
week August 21st included:

·Adult males and females resident in
Guatemala

·On electoral registered since 2011
minimum

·Sample taken in proportion to voter
densities around country

·Head to head questioning, voter
intention taken using simulated ballot paper/box

·1,199 people interviewed

·Margin of Error +/- 2.8%

·Confidence level 95%

·Dates survey taken August 7th to
13th

In short,
the right way to do a survey and Borge & Asociados has a reasonable
reputation for accuracy, much the way Contrapoder Magazine has a reputation for
editorial balance. But you'll also note that the date of the survey closes
before the latest round of scandals hit. Enough blahblah, here's the chart,
notes below:

·Manuel Baldizón of the LIDER party,
one of the most established (and establishment) political parties in Guatemala, is
still leading the polls but has seen his lead cut dramatically.

·Jimmy Morales, running as an
independent, has surged in the polls in the last two months from under 10% to
over 20% and has moved into second place.

·Sandra Torres, ex-wife of previous
President Alvaro Colom and from the ostensible political left (though hardly a
radical left wing, more straight centrist in reality) has also seen gains in
voter intention, but not enough to stop Morales from surging past her. She's also
considered part of the political establishment.

·The "don't know/no
answer/undecided" column has shrunk by nearly 12% in two months, with more
people making up their minds which way to vote. And Baldizón hasn't enjoyed any
of the new decisions.

·The "other" column (made
up of several minor candidates with little hope of winning) has also shrunk as
people seem to be gravitating towards the main three candidates now.

·The final bullet point (and one
we'll come back to): As Guatemala requires 50% +1 vote for its President, it's
now extremely unlikely that we'll get a winner in Round One and we're all set
for a second round run-off between the top two voted candidates that's slated
for November 8th. Two months between the two
votes may turn out to be an eternity in Guatemala.

Now for
some analysis and what you see in visual form (or go to Reuters here (13) for
its take on the big electoral story) is the growing surprise that is Jimmy
Morales. Morales (wiki page here (14) is best known as an actor and one half of
a long-running comedy TV show duo in Guatemala called 'Moralejas', in
which he stars along with his brother. They play a pair of cousins who get into
scrapes and then out of them again, it's reasonable but simple stuff. Morales
has also appeared as a TV presenter. He also has some form in politics already,
as in 2011 he ran for the job of Mayor of the Mixco province in Guatemala
and came third in the voting. But despite this background, supporters are quick
to point out that he's no intellectual lightweight and left education with a
stack of qualifications. He's also proved to be a formidable speaker and
debater in this campaign.

Despite his
apparent qualities, he's still come out of nowhere. In December 2014 Jimmy
Morales didn't even figure on the electoral radar. He then started a very low
cost campaign, mostly via Facebook and other social media plus some very
limited publicity space in the "normal" outlets (street signs,
newspaper ads) and to the surprise of many, was suddenly polling around 5%. The
campaign started to pick up the attention of some media and also of those who
were looking for a rallying point against the established parties and
candidates of always (in other words, the corrupt band of two or three parties
who pretend to be in opposition but in reality pass the power parcel between
each other).

In short
he's picked up support and momentum as the outsider candidate (for what it's
worth, "el outsider" is a phrase often used in Spanish for exactly
this type of political candidate) and has emerged from the pack as the one to
challenge the established political class. And when last week's voter intention
poll results came out it reportedly shook the political establishment hard;
he's now being taken very seriously indeed.
His message is strong on the main issue of this campaign, anti-corruption.
Disaffected voters are congregating around him, often because they believe he
couldn't possibly be any worse than the samo-samo options they'd have
otherwise. And it's that part of the story, the "jail them all"
message for the Guatemala
corruption class politicos and people in power that we on the outside should
most be concerned about.

As things
stand, the most likely outcome on September 6th is to see Baldizón (impossible
to be a more establishment politico) and Morales (impossible to be more of an
outsider) go forward into a second round run-off, with the vote on November
8th. And what happens then is anyone's guess (at the moment pollsters have just
two points between Baldizón and Morales in a head-to-head runoff) but as my
original thesis of buying Tahoe Resources (TAHO) (THO.to) was on the back of a very
likely Baldizón victory and a return to the normality (bad, corrupt,
self-serving but normal) of Guatemalan
politics, it's now impossible to make that call. Bottom line, I will not be
buying TAHO before the Guatemala
elections take place as it's just too difficult to make a confident call.

One more
thing: Over the years (as you'll recall, boringly) I've avoided an investment
in Tahoe Resources due to its prime weakness, the Achilles'
Heel of being located in Guatemala. It's also why I sold my RIO.to
shares before the merger had completed, I simply don't want to be exposed to
the country's off-scale political risk. That call has been totally vindicated
by the stunning events of the past few months,
but I'm also aware that on a micro-company basis, TAHO's a great mining company
with an excellent asset in Escobal. What could really ruin it for the company
is a black swan event that nobody sees coming and I'd vouch that if Jimmy
Morales wins the Presidency and takes office (without being assassinated beforehand, as I do fear for his life now)
the chances of such a black swan event would be much higher. I'd also say that
Goldcorp timed the sale of its shares in TAHO to near perfection.

Bottom
line: Guatemala
will be a fascinating place to watch in the next few weeks, but it's definitely
a case of "look but don't touch". Avoid exposure to the country.

...that the jokers in Toronto are making Robin Fryer president, with the news due out tomorrow Wednesday. As yet unconfirmed, but it's a desperate measure and indication of just how quickly the Hodges/Higgins plans are unravelling.

...all those people who didn't think that First Mining Finance (FF.v) would dilute the merry fark out of its shareholders by paying in shares for its acquisitions:

Ok, just the one of you. So here's today's NR in which FF.v announces it wants that mineral deposit under that lake, plus eating some crow..pickled crow at that. Bless em. And here's the ten day price chart:

Cute. Hey, funny how Daniel Ameduri of Future Money Trends didn't share this part of the FF.v strategy with you when he was pumping it out to the sucker end of the casino world, innit.

And we're now at 11 months and counting with the GSR over 70X, and in all that time the silverbugz have been telling us how much better their metallic fetish is going to be...soon...next week, anytime now...just you wait.

Face facts people, this guy understood more about capital markets than you do.

8/30/15

They were filed late Friday evening. Take a wild guess why. Here's just the balance sheet:

I honestly don't know where to begin, but perhaps the first thing is to note the way JFI luckily managed to re-value its biological assets to the tune of $18m in the space of just three months, without adding a single pine cone to their asset, and in that way managed to add a $21m non-cash revenue item to their P+L which allowed them to declare an annual profit of $5.8m.

Or maybe the way they're runninga $47m working cap deficit, with most of that owed to Bobby Genovese and due in August 2016.

Or maybe the way they say they're going to pay back that debt in one of three ways:

And that number three is the only way it's ever going to happen. And that means, yeah you guessed already, a move by JFI to run the mother of dilutive financings so that Bobby G can walk off with his cash intact and leave a new bunch of suckers holding this bag.

IKN 329 has just been sent to subscribers. It has another piece on the ongoing saga of Minera IRL as main feature, but this time it's not going to be reproduced on the public blog. Because it's too good.

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